World Bank controversy sends loss and damage talks into overtime

The president of the next UN climate summit, Cop28, has told government negotiators they must agree how to set up a new loss and damage fund before leaving the Egyptian city of Aswan.

The United Arab Emirates’ Sultan Al Jaber addressed the 24 members of the transitional committee by video link on Friday morning, the last official day of talks.

At Cop27 in Sharm el-Sheikh, governments tasked the committee with working out what a new loss and damage fund for climate victims should look like and present their proposals to Cop28 in November.

The fund is supposed to channel money to people who have suffered loss and damage caused by climate change. This could mean rebuilding homes after a hurricane or supporting farmers displaced by recurrent drought. Failure to reach consensus risks delaying support to those in need.

But developing countries were incensed by a proposal to host the fund at the World Bank, painting it as a US power grab. And rich-poor divides persisted on how to define the “vulnerable” groups eligible for funds and who gets to control spending.

Al Jaber accused the negotiators of dragging their feet and told them not to leave this task to ministers. “I expect you to deliver,” he said. “If I don’t see real and tangible results, that will not be acceptable.”

The committee was supposed to have three meetings this year but added a fourth to try and resolve deep splits between developed and developing countries.

As open negotiations resumed on Friday afternoon, that extra meeting was expected to run into extra time. Al Jaber said the Egyptian hosts could facilitate “extra hours or even an extra day in Aswan”.

Deal with the devil

Pedro Luis Pedroso Cuesta is a Cuban diplomat and chair of the G77+China bloc, which represents all the developing countries.

Speaking from Aswan, he told reporters on Thursday: “At this late hour, a small group of nations responsible for the most significant proportion of the stock of greenhouse gases have tried to bargain potential support for a Fund on one side with eligibility and administrative arrangements.”

Referring to the 16th century tale of Dr. Faustus, who sold his soul to the devil, he said: “Accepting this Faustian bargain now would break the Cop when we need the greatest internationalism and solidarity to solve climate and other global challenges”

He told reporters that he did not want to single out any country but “since you’re asking, we have been confronted with an elephant in the room – and that elephant is the US”. He said they came to the talks with a “fixed idea” that the World Bank should host the fund.

World Bank controversy

Developing nations have argued that the World bank is too slow, inefficient, unaccountable and lacks the organisational culture to tackle climate change.

World Bank officials addressed negotiators questions in a closed-door meeting in Aswan on Tuesday but Cuesta was not impressed.

He said that consultations with the Washington-DC based bank had “displayed clearly” that it was “not fit for purpose in relation to what we’re looking for” and the fund should be set up as part of the United Nations instead.

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He pointed out that the World Bank only added tackling climate change to its mission last week and said this showed they lacked the “operational culture” of climate action.

With the World Bank as host, he said, the fund would not be legally or operationally independent from the bank.

“We know the history”

The bank was set up by the US and its allies after the second world war and the US is still its biggest shareholder and chooses who leads it. “We know the history. We know the politics. We know the manipulation,” said Cuesta.

He added that, under the bank, the fund also wouldn’t be accountable to all governments through the Cop climate talks and the United Nations Framework Convention on Climate Change.

Developed countries have argued that setting up a new independ